Prioritizing Carrier Partners | Near-Term Actions for Long-Term Strategies
May 8, 2020
In a market punctuated by disruption and demand upheaval, organizations that have trusted, consistent partnerships will be most successful. When choosing suppliers and services, many factors contribute to final decisions, and those factors often vary based on team dynamics, organizational culture, financial goals, and long-term strategic vision.
For transportation procurement teams, price, service, and capacity tend to rise to the top as high-level indicators of good carrier partners. In times of heightened challenge, like those of COVID-19’s influence, price becomes less important as shippers seek carrier partners that are imperative to support their long-term strategy.
Some Breakthrough clients have seen how this long-term vision could play out, and they are choosing to ensure that their carriers are successful because they know this will benefit all parties in the long run.
During this unprecedented time of disruption, these Breakthrough clients have committed to immediate actions in their freight and procurement strategies that will ensure many of their carrier partners remain successful which will ultimately strengthen their relationship for the future.
The Right Price May Not Always Equal the Right Capacity
When goods need to be moved, getting them where they need to go on-time is a top priority. Doing so for the lowest cost available often makes that movement a success—but only when considered in a vacuum.
Read how Breakthrough clients are eliminating millions of dollars in overpaid fuel reimbursements through a volatile crude oil market, here.
A longer-term look at an organization’s goals may reveal that awarding the lowest cost carrier with freight led to inefficiencies down the line. Inconsistent service, failure to meet freight volumes, poor network fits, and other factors may pull those carriers out of alignment with a shipper’s freight needs because they weren’t awarded capacity due to their network fit.
This eventually forces that freight to brokerage or spot market capacity solutions, incurring additional costs and uncertainty for shippers. Finding the right capacity based on a diverse subset of data-supported factors creates better efficiency in shipper strategies under normal circumstances, but when markets go awry, the value is heightened.
Thinking Beyond Today’s Challenges for Long-Term Success
In unfavorable circumstances, like those instigated by COVID-19, the low-cost procurement model becomes even more detrimental—this time for the industry at large.
For small to medium-sized carriers that many shippers rely on for specialty freight needs—from flatbed to refer freight to niche regional areas of operation—even minor swings in demand for certain goods can create significant challenges for the health of their business. As consumer demand for both durables and nondurables decline—with durables sinking over 40 percent year-over-year in March—some carriers will be left with unused capacity that could ultimately shutter their doors.
Read about changes in freight volume by industry sector and how shippers are planning for the future, here.
In the near term, when demand is low and shippers are under pressure to keep their networks operational, it may be difficult to see the impacts these carrier closures will have on the overall transportation landscape. But as economic downturn persists, the transportation industry could suffer a year from now or more due to a lack of diversity in carrier procurement options, particularly those that meet specialty freight requirements.
In a time of crisis, opting for the lowest cost carrier may squeeze out high-value service providers that are key to a healthy and enduring capacity procurement strategy.
Supporting Partnerships that Contribute to Your Strategic Vision
These are uncertain times for everyone. As Breakthrough and our clients continue to interface about the great challenges that continue to emerge across our industry, we are fortunate and proud that the shippers in our network see the bigger picture at hand.
Read how Breakthrough is helping shippers outside of our network navigate challenging shipping environments in times of need, here.
Thanks to the commitment of several of our clients that engage with our Network Intelligence service offering, we are opening more transparent lines of communication to meet the capacity demands of our shippers, their carriers, and the broader transportation ecosystem. These clients recognize the important role their smaller, regional, and specialty carriers play in their ongoing strategy, so they reached out to Breakthrough to identify who to turn to with extra capacity, how to connect carriers to additional capacity, and ways to streamline those interactions.
By bringing this extension of Network Intelligence to the forefront of our clients’ agile supply chain strategies, our shippers choose to bring these carriers with them through this crisis. Rather than leaving them behind for cheaper, and sometimes faster brokerage and spot market solutions, we are finding innovative ways to share capacity, use it, or send it elsewhere.
In the interest of maintaining the partners that make our clients successful and preserving the health and viability of the transportation industry, Breakthrough can bring deeper collaboration throughout the shipping community.
Learn more about Breakthrough’s approach to freight management strategies, here. For more information about how the coronavirus is influencing the shipping and transport industry, visit our resources page.